Choosing Evaluating Marketing Channels Matt Le Roux Marketing

Choosing & Evaluating Marketing Channels Matt Le. Roux, Marketing Specialist

Matt Le. Roux • Marketing Specialist with CCE, Tompkins County. • Recent Master’s in Ag/Food Marketing from Cornell. • Worked for 5 years for the New England Livestock Alliance & Heritage Breeds Conservancy. • Started 2 brands of Natural & Grassfed beef.

Selling to a buyer who is not the end user. Selling directly to the end user. Packer Farmers’ Market Restaurant Freezer Trade Grocery/Retail CSA/Buying Club Distributor Farm Stand/Store Auction Web Institution/Food Service U-pick

Factors to consider when choosing marketing channels: What is your production like? In Scale & Diversity In Specialization Location & Local Population How many of them are there? What do they want?

Opportunity is knocking… CSA Farmers’ Market U-Pick Grocery Restaurant Cooperative Farm Stand Distributor

Joe, if you bring your beef But, to the it costs farmers’ $300 market per day the to prices are sellsothere. high you can sell $500 worth per hour! …and its only 1 hour per week. . . …and it takes 12 hours to prepare. . . …and if it rains no customers come. That’s great. I am going to sell there.

How do you evaluate a market opportunity? Six interacting factors impact the “performance” of a marketing channel including: You can sell $500 worth per hour! Price & Profit It costs $300/day to sell there. Associated Costs …and its only 1 hour per week. . . Sales Volume …and it takes 12 hours to prepare. . . …and if it rains no customers come. Lifestyle Preferences Labor Requirements Risk

The Moving Target • Which channel is best? • One channel does well in one way, poorly in another so how do you know?

Muddy Fingers Farm • Diverse vegetable & fruit production. • Farmers’ markets, CSA, & restaurants. • No paid labor, 6 working shares, family & friends that volunteer. • 2. 5 acres in production. • Over 45 crops.

Methodology • Collect logs of all marketing labor (from harvest to sale) for one typical, peak season week. • Collect gross sales & mileage for the week. • Collect ranking on lifestyle & risk. • Collect weights for each ranked category. Why labor logs? • • Labor is the largest marketing expense. Consistent unit and format. Operators tell hired help to complete the forms. Each employee filled out their own sheets.

Labor logs Harvest Process & Pack Travel & Delivery Sales time

Methodology • Use data to rank and compare channels: – Profit (gross sales – (labor + mileage cost) – Labor hours required – Sales volume • Also use farmer ranking for : – Risk perception (financial risk, lost sales, etc…) – Lifestyle preference (enjoyment, stress aversion)

Sales Volume by Channel

Total Labor Hours

Simple Comparison of Labor & Sales CSA: 18% of weekly labor, 45% of weekly gross sales. Watkins Glen FM: 13% of weekly labor, 5% of weekly gross sales.

Profit as % of Gross Sales (with Owner Labor Valued)

Risks & Preferences: Labor requirements Price risk Customer turn-out Competition Buyer back-out Processor is booked People on the farm Customer interaction Time in the field Wash & pack Displays

Rank & Compare Opportunities for Performance Factors Based on 5 factors and farmer chosen weights.

Practical Application: Marketing Decisions • Considering a marketing change, what should it be? • Reduce participation in weakest performing channel. • Increase participation in best performing channel. • Strategic channel combination to maximize sales and reduce risks.

Practical Application: Marketing Decisions • Muddy Fingers Farm has been considering a marketing change, what should it be? • Could drop the Watkins Glen Farmers’ Market and add 12 shares. • Weekly gross sales remain equal. • 8 -9 hours/week less labor.

Channel Combination with prioritized selling maximizes sales of unpredictable perishable crop yields.

Marketing Channel Assessment • Identify your goals and lifestyle preferences. • Keep marketing cost & returns records, if only for “snapshot” periods. • Value your own time to present an accurate picture of marketing costs. • Rank & compare opportunities to maximize profits. • Combine channels to max sales & reduce risks.

Contact information: Matthew Le. Roux Agricultural Marketing Specialist Cornell Cooperative Extension Tompkins Co. 615 Willow Ave. , Ithaca, NY 14850 607 -272 -2292 mnl 28@cornell. edu